San Francisco is the most expensive city to buy property. As a result, more people are looking beyond the traditional neighborhoods such as Pacific Heights and The Marina to buy property. More people are wondering whether it is good to buy property in the western part of San Francisco.
The western parts of San Francisco include the following neighborhoods:
Outer Parkside/Outer Sunset
Golden Gate Heights
St. Francis Wood
It is my opinion that the western and southwestern neighborhoods are the most attractive neighborhoods to buy property today. You get more value, more space, and cheaper prices at grocery stores, neighborhoods and more.
Why Buying On The West Side Of San Francisco Is A Good Idea
You should buy property in the western parts of San Francisco. Here are the reasons why.
1) Lower valuations. While the median price per square foot in SF in 2021 is about $1,050 according to the MLS, you can buy homes in these neighborhoods for a 20% discount to the average. If you compare price per square foot versus the most expensive neighborhoods in the north end, you can get a 40%+ discount often times.
2) Ridesharing. No longer do you need to live close to a BART or MUNI station to save time and money. With the ubiquity of rideshare options from Uber and Lyft, the cost of transportation has plummeted. For example, it used to cost $25 – $30 to go from Golden Gate Heights to downtown San Francisco by taxi. Now you can take an Uber Pool for $5-6 to get downtown.
3) Less density. The northern, central, and eastern parts of San Francisco are becoming incredibly congested. There's been an increase in crime, noise, pollution, traffic, and debris. By moving to one of the western and south western neighborhoods, you experience much more peace and quiet. Most of the buildings in these neighborhoods consist of single family homes instead of apartment buildings.
4) Better for family. I used to live in the Marina and Pacific Heights from 2001 – 2014. I left the Marina in 2014 partially because I lived on a busy street next to the busiest street in SF (Lombard St.). As an adult without kids, being in a congested neighborhood with lots of cars was fine. But I knew I wanted to have children. Living in Golden Gate Heights feels much more peaceful. There are plenty of parks, including Golden Gate Park close by. There are many more families and playgrounds as well.
5) More diversity. If you want to buy property in San Francisco and enjoy diversity of food, people, and where people work, then moving towards these neighborhoods will provide you a wealth of diversity. Most people who live on the north side of San Francisco are white and work in tech or finance.
6) Lower cost of food and services. When I lived in the Marina, my haircut cost $30. Where I go to get a haircut in the Inner Sunset costs $15. Dinner would regularly cost $35+/head in Pacific Heights. You can have a similar meal for $20/head.
7) Easy access south. Unlike living in District 7 (north end), living on the western and south western side gives you much easier access to San Mateo, Burlingame, San Carlos, Palo Alto, and other South Bay Cities. It often takes 15-20 minutes alone to go from the north side of San Francisco to the south.
San Francisco Is Good Value
Savvy people who recognize my above points are looking to buy single family homes on the western side of San Francisco. It's also no longer necessary or sexy to live close to work. The pandemic has normalized remote work.
With the emergence of work-from-home options and freelance opportunities, it actually could be viewed as sad that someone is paying a premium to live close to the office. It shows they don't have as many options to be free.
I strongly believe Golden Gate Heights or any home with ocean views in San Francisco are the biggest buying opportunity today. Properties in every major city around the world with ocean views trade at a premium, except for in San Francisco. But this trend is slowly changing.
Despite the high cost of real estate by American standards, San Francisco is actually one of the cheapest international cities in the world. No other city has a concentration of this many global firms like Facebook, Google, Apple, Twitter, Uber, Lyft, Pinterest, and Slack who pay top dollar.
Real estate prices are supported by high incomes in San Francisco, whereas in cities such as Vancouver, they are not. Name one global company in Vancouver, Canada that pays as much as employers in the SF Bay Area? There are none to warrant their $1.4 million average home price.
The IPO bonanza in recent years will mint over 10,000 new millionaires and billionaires. Their newfound liquidity will find its way into SF real estate, just like what happened after Facebook went public in 2012.
Post-pandemic, big city living is back!
Diversify Your Real Estate Holdings
Once you've gotten neutral San Francisco real estate, it's good to diversify your real estate investments into lower cost areas of the country with higher cap rates that could turn into the next San Francisco Bay Area.
One of the best ways to strategically and surgically diversify your investments is through real estate crowdfunding. Real estate crowdfunding emerged after the passage of the 2012 JOBS Act that allowed more investors to invest in opportunities that were once reserved for only the ultra-high net worth or institutional investor.
I recommend investing in real estate crowdfunding with a platform like Fundrise and CrowdStreet instead. These two platforms are the oldest and most well-run real estate crowdfunding companies today. They were both founded in 2012.
Investing in real estate long term is one of the classic ways to boost wealth. With a platform like Fundrise, you can invest in commercial real estate across the country for as little as $1,000. This is also great if you can't come up with the $300,000 median downpayment for a SF Bay Area home.
With a platform like CrowdStreet, you can pick and choose the best of the best real estate crowdfunding opportunities. Then you can build your own select real estate portfolio if you have the inclination.
Invest In Real Estate For Passive Income
I've personally invested $810,000 in real estate crowdfunding to invest in the heartland of America because I believe in the multi-decade demographic trend of moving away from the expensive coastal cities.
Given I own my primary residence already and no longer have the time or desire to manage tenants and maintenance issues, investing in real estate crowdfunding and publicly traded REITs are now my investments of choice.
Both platforms are free to sign up and explore. I've spoken to and met with both companies and believe in their long-term future. Investing in real estate crowdfunding is a multi-decade positive trend and I've put my money where my writing is.
For more information, check out my Real Estate Crowdfunding Learning Center.